Task Force Urges Higher Taxes, More Regulation for Alcohol Industry
STATE HOUSE, BOSTON — Higher taxes, increased fines and a significantly larger government oversight agency are among the recommendations of a task force that spent months reviewing laws and regulations that apply to the alcohol industry in Massachusetts.
The Alcohol Task Force formed in February by Treasurer Deborah Goldberg on Thursday issued 37 recommendations including raising the excise tax paid on beer, wine and spirits, hiring 30 new investigators and 15 staff members for the Alcoholic Beverages Control Commission at an annual cost of $3.1 million, ending the discounted sale of alcohol from distributors to retailers, and reconfiguring the ABCC's fine structure.
"The (Task Force) has a mandate to recommend forward thinking changes, which required us to consider what the industry might look like 10 to 15 years from now," the task force wrote in its report. "Specifically, the TF considered that ways to purchase alcohol are changing with time and technology, buying habits of younger generations are evolving, and the market itself is changing as evidenced by increasing numbers of craft and farmer breweries, wineries, and distilleries in Massachusetts and across the country."
The seven-member task force was directed to look at the range of laws passed after the prohibition of alcohol was repealed in 1933.
Though the task force did not recommend an end to the Bay State's prohibition on happy hours or changes to the roles of state and local authorities in approving and licensing establishments, the panel suggested changes they said would benefit consumers, like getting rid of the limit on the number of alcohol licenses grocery store chains can hold, allowing bars to accept out-of-state photo IDs as age verification, allowing brew pubs to self-distribute their beer on Sundays, and increasing the maximum alcohol content for cider from 6 percent to 8.5 percent.
The task force does not appear to have given much credence to the requests of Total Wine and More, a national package store chain that had been seeking to loosen restrictions on selling alcohol at discounted rates, to allow alcohol retailers to offer coupons or loyalty programs, and other things the company referred to as "updates."
"The Task Force's extensive report will hopefully be the start of a broader discussion with consumers who will be most impacted by some of the sweeping recommendations made by its authors. Important policy changes that would benefit consumers should be a priority of Massachusetts alcohol law reform," Edward Cooper, vice president for public affairs and community relations at Total Wine & More, said in a statement. "Responsible consumers of beer, wine and spirits should have access to valuable discounts, retailer coupons and loyalty programs like customers in virtually every other segment of the retail sector. We encourage future reforms to place customers on an equal footing with industry insiders and help make the alcohol beverage market simple, fair, and affordable."
One change the task force suggested that consumers would certainly notice is boosting the state excise tax rates on beer, wine and liquor, which are currently among the lowest in the country. Citing data from the Tax Foundation, the task force said the state excise on beer is the 44th lowest in the country, the excise on wine is 33rd lowest and the excise on spirits is 35th lowest in America.
The task force recommendation is to increase the excise tax on beer from 11 cents to 16 cents per gallon, on wine from 55 cents to 82 cents per gallon, and on spirits from $4.05 to $6.07 per gallon to generate additional annual excise tax revenue of $41,654,915. Those tax hikes, the task force said, would represent "positive step towards implementing sound public health policy while also generating needed revenue for the Commonwealth."
The roughly 50 percent increase in excise taxes would shift Massachusetts from having the 44th lowest to 35rd lowest excise rate on beer, from having the 33rd lowest to 26th lowest rate for wine, and from having the 35th lowest to 23rd lowest excise rate on spirits. The increases also "would provide sufficient revenue to increase ABCC’s budget, and to fund the ABCC Health Education Fund and other statewide health and safety initiatives," the task force said in its report.
In 2010, voters approved a ballot question to eliminate the application of the sales tax to retail alcohol purchases, a policy adopted in 2009. The ballot question passed with 52 percent of voters in support and the state sales tax was no longer applied to alcohol purchases as of Jan. 1, 2011.
The current ABCC staff consists of 26 people who monitor 24,000 licenses and process 32,000 license transactions each year. Massachusetts has roughly one investigator for every 800 licensees - the national average is one investigator for every 261 licensees, the task force said.
"ABCC does not have sufficient staff to review and investigate all of the complaints in a timely manner, to conduct other routine investigations that are consistent with best practices, or to review and investigate license applications," the group wrote in its report. "In addition, the introduction of casinos in Massachusetts will require ABCC to monitor licensees in the surrounding areas and the casinos, especially if they are permitted to sell alcohol until 4:00 a.m."
The task force recommended that the ABCC's budget be increased to allow for the hiring of 30 additional investigators and 15 additional office personnel, which is expected to cost $3.1 million annually. The task force also suggested that the ABCC establish regional investigative offices for Cape Cod and the Islands, Worcester, Springfield and north of Boston.
The alcohol industry is the constant focus of legislation on Beacon Hill, including proposals seeking more stringent and more relaxed regulation. For instance, the Legislature routinely passes special laws allowing cities and towns to give out alcohol licenses and has blocked bills enhancing local licensing powers.
Among the task force's recommendations is to require a city or town that files legislation seeking more than 10 liquor licenses to "state clearly in the proposed legislation" the number of licenses and license types requested, and how many of each type of license will be issued for each year. That information would be required to be included in a public hearing notice for the legislation.
Many of the task force's recommendations would need approval of the Legislature, and the treasurer said she is sifting through the report to determine which recommendations she will press the Legislature to adopt.
"Our office has just begun reviewing this report and will identify next steps that can be done internally, in addition to developing long term legislative priorities that will promote public safety, help our Massachusetts businesses, and enhance the smooth operations of the Alcohol Beverages Control Commission," Goldberg said in a statement.
Chaired by attorney E. Macey Russell, the task force included former Fitchburg Mayor Lisa Wong, attorneys Kate Cook and Deborah Gold-Alexander, former Massachusetts Port Authority chief legal counsel Rachael Rollins, former Inspector General Robert Cerasoli, and Pete Wilson, the former press secretary to former Senate President Stan Rosenberg.
--Colin A. Young, State House News Service